Upsizing From a Unit to a House in South East Melbourne, Your Practical Guide
You've outgrown the unit. Maybe it's a growing family, a home office that needs its own room, or simply the pull of a garden and a street where the kids can kick a ball. Whatever's driving it, upsizing from a unit to a house in South East Melbourne is one of the most common and most financially complex moves a borrower can make, because you're not just buying, you're also managing what you already own.
The good news is that unit owners here are often better positioned than they realise. If you bought a few years ago in suburbs like Cheltenham, Murrumbeena or Bentleigh, there's a reasonable chance your equity has moved, and that equity is the engine that drives the upgrade. Understanding how lenders read it, and how to sequence the transaction, is what separates a smooth move from a stressful one.
Our team helps upsizers across South East Melbourne work through exactly this kind of transition, comparing options across 60+ lenders. The upsizing home loan side of it is where most of the difference is made.
Key takeaways
- Equity in your unit can fund the deposit on your next house.
- Lenders assess both loans together, so existing debt shapes your capacity.
- Most South East Melbourne unit medians sit well below house medians in the same suburb.
Is upsizing from a unit to a house in South East Melbourne the right move right now?
For most unit owners with a few years of equity behind them, the answer is yes, and the maths is more favourable than it looks from the outside. The gap between a unit median and a house median in the same suburb can feel like an insurmountable leap, but equity bridges much of it, and lenders have structured ways to help you sequence the transaction without selling first.
The question isn't really whether to upsize. It's whether to sell before you buy, buy before you sell, or hold the unit as an investment while you move into the house. Each path carries a different loan structure, a different risk profile, and a different tax consequence, and the right one depends on how much equity you have, how stable your income is, and how quickly you can move.
How do lenders assess an upsizer's borrowing capacity in South East Melbourne?
Lenders look at your full debt position, not just the new loan in isolation. CoreLogic data shows unit medians across the South East Melbourne suburbs most upsizers are moving from, including Cheltenham at $700,000, Murrumbeena at $636,250 and Carnegie at $630,000, leaving meaningful equity for buyers who purchased three to five years ago. That equity is the key input, but it's not the only one.
Your existing mortgage, your income and your household expenses all feed into a single serviceability calculation. The lender applies a buffer set by APRA of 3.0% above your actual rate when stress-testing your repayments. If you're holding the unit as a rental, lenders typically accept around 80% of gross rent to offset holding costs, so the unit pays part of its own way. But the remaining debt and the new purchase loan sit on the same balance sheet.
The APRA debt-to-income cap also matters here. Banks and credit unions are restricted in how much new lending they can write above a debt-to-income ratio of six times gross income, and investors feel this cap first. If your unit loan and your new house loan combined push past that threshold, the lender may decline, cap the amount, or require a larger deposit. Non-bank lenders are not subject to the same cap, which is one reason lender choice moves the number more than the rate does.
What lenders look at on an upsizer application:
- › Equity in the current unit: calculated as the property's current value minus the outstanding loan balance. The lender will order a valuation.
- › Combined debt position: both the unit loan (if retained) and the new purchase loan are added together for serviceability.
- › Rental income offset: if the unit is retained as an investment, around 80% of gross rental income is credited against holding costs.
- › DTI ratio: total debt divided by gross annual income. Lenders track this carefully under the APRA cap.
- › Living expenses: declared expenses are assessed against the Household Expenditure Measure benchmark. Whichever is higher is used.
Source: CoreLogic (via YIP, June 2026) and APRA.
What we see most often is a buyer who's done the equity maths and assumes that's the whole picture. It's usually not. The existing unit loan is still a commitment in the lender's eyes, and the combined debt is what drives the outcome, not the equity figure alone.
Evelyn Clark · Director, Mortgage & Finance Broker · Chat to Evelyn →
What are the main pathways for upsizing from a unit?
There are three genuine options, and each suits a different financial position. None is universally right, which is where the advice matters.
The options worth weighing:
- › Sell first, buy second: cleanest structure · no bridging loan required · proceeds fund the deposit · risk of a timing gap between settlement dates
- › Buy first with bridging finance: peak debt during the bridge · assessed on end debt at completion · term typically 6 to 12 months · interest capitalised during the bridge period
- › Retain the unit as an investment: two loans ongoing · 80% of rent offsets costs · DTI ratio is the binding constraint · land tax applies from the first year
If you have the unit under contract to sell and a firm settlement date, bridging is often the cleaner path than waiting. If the unit is not yet listed, retaining it as an investment works best where your income comfortably covers both loans under the stress test.
How much does upsizing cost in South East Melbourne, and what deposit do you need?
House medians across the area's mid-tier suburbs tell the real story. CoreLogic data shows Cheltenham at $1,298,750, Moorabbin at $1,280,000 and Bentleigh at $1,755,000 for houses over the 12 months to June 2026. Upsizers moving from a unit in one of these suburbs into a house in the same suburb are looking at a gap of roughly $600,000 to $1,100,000, depending on the suburb and the property.
That gap is typically funded from three sources: equity released from the unit sale, any additional savings, and the new loan. At 80% LVR on a $1,300,000 purchase you need $260,000 of your own funds. At 90% you need $130,000, but lenders mortgage insurance applies above 80% unless you qualify for an LMI waiver. Most upsizers with equity in their unit aim for 80% on the new purchase by using the sale proceeds to top up the deposit.
Transfer duty in Victoria is charged on the purchase price at standard rates, with no first home buyer concession available on a second purchase. On a $1,300,000 house, duty runs to a material amount. Direct readers to the State Revenue Office Victoria's duty calculator for their exact figure.
Whether you're buying in Cheltenham- Bentleigh or Moorabbin across South East Melbourne, the deposit structure is the first thing to nail down before you start shopping.Source: CoreLogic (via YIP, June 2026) and State Revenue Office Victoria.
| Get in touch Need help upsizing from a unit to a house? We're a local team who understand how lenders actually assess your situation, not just your rate. We'll compare your options across 60+ lenders to find the right fit.
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When does upsizing not make sense?
The honest answer is: when the combined debt position under the stress test leaves you with little room to move. Lenders add a 3.0% buffer to your actual rate, and on two substantial loans that buffer can push your assessed repayments well above your real ones. If the numbers are tight at application, they'll be tight in practice too, and a rate rise or an income disruption eats the margin quickly.
Retaining the unit as an investment also attracts land tax in Victoria from the first year it's no longer your principal place of residence. On a unit valued at $636,000 to $700,000, that's a real annual cost, and the rental income needs to cover it. It is also worth knowing that negative gearing on established residential property purchased after 7:30pm on 12 May 2026 will be restricted from 1 July 2027, when losses will be quarantined rather than deductible against salary income. Property held before that date is fully grandfathered, and new builds remain eligible for full negative gearing. This is law, not a proposal, and it changes the calculus for anyone buying the house and holding the unit simultaneously.
If your unit equity is strong but your income hasn't kept pace with the house prices you're targeting, it may be worth waiting twelve months, paying down the unit loan, and letting income grow before you apply. Stretching to the ceiling on a combined debt position the moment you upsize leaves no buffer for what comes next.
How to upsize from a unit to a house in South East Melbourne, step by step
Step 1: Talk to us
We start by mapping your equity position, your income and your target price range to work out which pathway makes sense and which lenders are worth approaching.
Step 2: Get your unit valued and confirm your equity
A lender valuation drives the usable equity figure. We order it alongside a pre-approval so you know exactly what you're working with before you start making offers.
Step 3: Structure the loan and choose your sequencing
Depending on your equity and income, we structure the application as a bridging loan, a simultaneous settlement, or a standard purchase with the unit sold or retained, then match it to the right lenders on the panel.
Step 4: Manage settlement to completion
We stay across both settlements, coordinating the timing so the deposit from your unit sale reaches the purchase loan at the right moment and nothing falls through the gap.
Where the unit's already under contract, I'd almost always lean toward bridging rather than waiting for the proceeds. The timing risk of a gap between settlements is real, but the rate on a clean bridging loan over six months costs less than losing the house you want while you wait.
Evelyn Clark · Director, Mortgage & Finance Broker · Chat to Evelyn →
What goes wrong when people upsize from a unit to a house?
Where upsizers lose ground:
- › Overestimating usable equity: the lender values the property, not the market listing. A valuation that comes in below the owner's expectation reduces the accessible equity and can change the whole structure of the deal.
- › Applying to one lender first: the first lender assesses the combined debt and declines. That assessment sits on the credit file as an enquiry, and it follows every subsequent application. Going through a broker who can match the application to the right lender avoids the decline sitting on the file.
- › Underestimating the costs of the move: transfer duty on a house purchase in this price range is substantial. Add conveyancing, building and pest, and moving costs, and the upfront spend beyond the deposit is real. Many buyers budget only for the deposit.
- › Timing the bridging loan too loosely: a bridging loan with no firm sale date on the outgoing property can stretch past its original term. Interest capitalises during that period, so the longer it runs, the higher the end debt. A tighter sale timeline protects the end position.
Frequently Asked Questions
Can I use equity in my unit as the deposit for a house in South East Melbourne?
Yes, lenders allow you to release equity from your unit, up to around 80% of its value minus the outstanding loan, and use it as the deposit on the new purchase. The lender orders a valuation to confirm the usable amount.
Should I sell my unit before buying a house, or buy first?
If your unit is under contract, buying first with bridging finance is usually cleaner and avoids the risk of losing the house you want. If it's not yet listed, selling first removes the bridging cost but requires careful timing between settlements.
What is the difference between peak debt and end debt on a bridging loan?
Peak debt is the combined balance during the bridge, covering both the unit loan and the new purchase. End debt is what remains once the unit sells and its proceeds clear the balance. Lenders assess serviceability on end debt, not peak debt.
Will keeping my unit as a rental affect my ability to borrow for the house?
Yes, retaining the unit adds the existing loan to your combined debt, which lenders assess alongside the new purchase loan. Around 80% of gross rental income is credited back, but the debt-to-income ratio is what constrains the outcome for most upsizers in this position.
Does negative gearing on my unit change if I move out and buy a house?
If you purchased your unit before 7:30pm on 12 May 2026, it is fully grandfathered and negative gearing is unaffected. Units purchased after that date will have rental losses quarantined rather than deductible against salary income from 1 July 2027, under legislation that has already passed Parliament.
Is a mortgage broker better than going to my bank for an upsizing loan?
A mortgage broker, every time. Upsizing involves two loans, a valuation, a potential bridging structure and a DTI ratio that some lenders accept and others won't. The right lender for your combined position is usually not the one you already bank with.
Your Next Steps
Upsizing from a unit to a house in South East Melbourne is one of the bigger financial decisions you'll make, and it turns almost entirely on how you sequence the transaction and which lenders you approach. Getting the equity assessment right, choosing the right loan structure, and timing both settlements are each small decisions that compound into a very different outcome.
Ready to find out which lenders will work best for your upsizing move? Contact the EverLend team or call 03 7036 3356. We'll canvas our 60+ lender panel and find the most suitable options for your circumstances.
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External Resources
EverLend · South East Melbourne · Ever Lend Pty Ltd (ACN 625 080 515), authorised under Australian Credit Licence 517192 · General information only - this article does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions.
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